by Ray Goldbacher, USA TODAY

by Ray Goldbacher, USA TODAY

Billionaire investor Warren Buffett said on CNBC Monday that many money managers will be selling some investments when the Federal Reserve stops pumping extra money into the economy.

The chairman and CEO of Berkshire Hathaway says stock prices have gotten a boost from low interest rates engineered by the Fed's stimulus efforts, and it will be a "very interesting day" when it becomes clear the Fed has reversed direction.

Global markets, he said, are on a "hair trigger," looking for any sign the central bank may start raising rates.

"I think the Fed will try to give little signals here and all of that. But in the end, there are an awful lot of people who want to get out of a lot of assets if they think the Fed is going to tighten a lot," he said on CNBC.

He said there's no question that stock prices are higher than they would be otherwise, because interest rates are essentially zero.

Janet Yellen, vice chair of the Federal Reserve, provided an aggressive defense of the central bank's efforts to keep interest rates low Monday, seeking to answer critics both inside and outside the Fed who have warned that the efforts could generate higher inflation or market instability.

The Fed is buying $85 billion per month in Treasury bonds and mortgage-backed securities to push long-term rates lower.

Yellen said while the risks needed to be monitored closely, "At this stage, I do not see any that would cause me to advocate a curtailment of our purchase program."

Her comments to a policy conference sponsored by the National Association for Business Economics echoed remarks Fed Chairman Ben Bernanke made last week in congressional testimony and in a speech Friday night.

Yellen said while there are risks from the Fed's aggressive efforts to boost the economy and reduce unemployment, there are also risks from not being aggressive enough.

"At present, I view the balance of risks as still calling for a highly accommodative monetary policy to support a stronger recovery and more rapid growth in employment," Yellen said.

She said at the moment she does not see "pervasive evidence of trends such as rapid credit growth, a marked buildup in leverage or significant asset bubbles that would clearly threaten financial stability."